MGB225 Group Reflection - Assignment Solution

Introduction
Our company, Freshwater Mining Company (FWMC) are a billion dollar mining and mineral processing company based in Brazil. We pride in being an internationally acclaimed company that is also one of the largest logistic operators in South America. After a recent economic and political shift in Brazil, we have been promoted to organise a renegotiation, in regards to a previous order of X-Ray equipment placed with Dutch X-Ray, a long term partnered company. This renegotiation was heavily encouraged due to the recent rumoured risk of the economy and exchange rate devaluing, as well as the possibility of the government banning all forms of external debt. Therefore, throughout the negotiation, our company wished to renegotiate new terms including; Faster delivery time of all orders, wishing to increase delivery time from 20 weeks to 8-10 weeks. We also proposed the units to be delivered to 2 new locations (Lima and Santiago De Chile), whilst maintaining the original ordered price as much as possible. Finally FWMC negotiated the total number of orders to be almost halved in comparison to what we previously were wanting to order, therefore allowing for the faster delivery and new locations to be achievable for Dutch X-Ray.
The table below further explains the comparison of the previous order and the outcome we would like to achieve for the new order in this negotiation with Dutch X-Ray:

5 x MiniPal’s @ $60,000/unit = $300,000
7 x Epsilon 5’s @ $100,000/unit = $700,000
4 x MagixPro @ $250,000/unit = $1,000,000
Total Price: = $2,000,000

3 x MiniPal’s @ $60,000/unit = $180,000
4 x Epsilon 5’s @ $100,000/unit = $400,000
2 x MagixPro @ $250,000/unit = $500,000
Total Price: =
$1,080,000

10% deposit upon ordering Willing to pay up to 70% deposit upon ordering
Delivery location: São Paulo Delivery location: Lima and Santiago De Chile
Delivery time:
MiniPal - 12 weeks
Epsilon 5’s - 16 weeks
MagixPro - 20 weeks

Delivery time:
8-10 weeks on all orders

Despite our demand, as a company we have a policy on taking advantage of large scale operations to get the best prices and conditions for the majority of our purchases. We have a heavily integrated system that defines reasoning behind selecting a provider. Long term partners would gain a beneficial outcome to our company, to maintain a stable customer base, therefore it is integral as a company to maintain quality and efficiency.

Impact of Group’s Strategies and Tactics on Outcomes

As a company, we conducted the negotiation using a co-operative negotiation style. This style was pinpointed by Professor Lurioe Weingart (Harvard Law School, 2016) and involves the company maximising on our own goal, as well as our counterparts’ results. This approach relies on collaborative and assertive negotiation from both parties. Additionally, the cooperative approach is a form of Integrative Negotiation. Therefore the negotiation focused heavily around commonalities and the interests of both parties. We followed this approach due to our company
goal of keeping a strong business partnership with Dutch X-Ray. It was also assumed that this was the style that Dutch X-Ray were conducting, as their main competitor, Japanese X-Ray, were offering us strong BATNA. Therefore, it was imperative that Dutch X-Ray were to keep this deal, to ensure their success.

Following this approach, we used a number of tactics to assist in encouraging the negotiation. Initially, we stated our lowest possible delivery time of 8 weeks, to allow for flexibility in case it were to reach our resistance point of 10 weeks being as long as we were willing to negotiate on waiting. We also stated our two new proposed locations and the amount of items we wished to order.

Throughout this, open communication (Staff, P. 2019) clearly conveyed to the other company what type of offers we needed. Using this method allows the other party to specifically understand our negotiation offers, and minimises any tension, confusion or miscommunication. By avoiding unnecessary conflicts we can begin to establish a strong relationship from the beginning. Furthermore, open and honest communication is crucial to reaching a contract agreement and key to establishing a partnership (Staff, P. 2019). Additionally, throughout the open communication, we utilised tactics outlined by Putnam and Jones (1982) such as showing concern for the opponent and exhibiting positive reactions.

Open ended questions were also utilised (Stark, P. 2019), to allow for Dutch X-Ray to negotiate on their terms and therefore come together with a cooperative agreement that could benefit both parties. By asking a range of questions that further allowed them to negotiate on their own terms, this motivated the negotiation in a collaborative approach (Spangler, B. 2013).This exchange of information is a key characteristic in encouraging integrative negotiation.

After we stated our requests, Dutch X-Ray agreed to our terms under the condition that we pay a higher percentage of payment upfront. This tactic follows the method of ‘Expanding the Pie’ (Staff, P. 2019), where both parties come to a win-win scenario with mutual benefits. As we initially assumed that they were going to expect more payment up front, we were prepared to negotiate this term to keep our negotiation and relationship strong. Furthermore, establishing a solid relationship from the beginning of a partnership is crucial in any business deal (Salacuse, J. 2019). However, more importantly sustaining that relationship over the long term will help to increase efficiency and trust in future negotiations. On behalf of FWMC, one of our strategies ensures we are motivated to keep a long term relationship and continue to work with Dutch X-Ray as a priority for future deals.